O'Malley unveils $39 billion budget with no new taxes

Gov. Martin O'Malley proposed a $39 billion state budget Wednesday that puts more money toward education, prisons and the environment, but calls for no new fees or taxes.

"This budget should be an articulation of who we are and what's important to us," O'Malley said as he delivered the final budget of his two terms as governor.

The proposal for the next fiscal year — about $2 billion larger than this year's budget — seeks more spending on initiatives that O'Malley described as investments in public safety and expanding the middle class.

Among them is a proposed $4.3 million to enroll 1,000 more low-income children in pre-kindergarten classes, the first step of an expansion promoted by Lt. Gov. Anthony Brown in his campaign to succeed O'Malley.

The governor also suggested spending more on several proposals to strengthen the state prison system in the wake of a corruption scandal at the Baltimore City Detention Center that made national headlines. The plan calls for 100 new corrections officers — primarily in Western Maryland — plus a K-9 unit to sniff out contraband and $1.3 million to expand the corrections agency's internal investigation unit.

State employees would get a 2 percent cost of living increase next January.

Republicans, who are a minority in Annapolis, were pleased O'Malley did not suggest new taxes but criticized him for past increases and for proposing a budget they see as much too large.

"This certifies the reputation that he has earned as a tax-and-spend governor," House Minority Leader Nic Kipke said, pointing out that the state budget has grown from $29 billion the year O'Malley took office.

"Some of those things he didn't have control over, but I believe he takes pride in the philosophy that the government needs to run a large part of our economy, and I think that's to the detriment of the economy," Kipke said.

Democratic leaders praised the measure as dealing with the effects of a still-sluggish economy without major cuts to key government services.

"The budget is one that we can all take a lot of pride in. It was a lot of hard work," House Speaker Michael E. Busch said. "The state can take a deep breath, look back and say we made a lot of tough decisions. And we fully funded education."

But Busch cautioned that the proposal still faces scrutiny in the General Assembly, which can make some changes before approving it. "I'm not going to say the budget will be rubber-stamped and out tomorrow," he said.

Senate President Thomas V. Mike Miller said O'Malley deserves credit for resolving a financial mess during his tenure and keeping down state spending.

While the budget includes a record $6.1 billion for K-12 education, largely the result of Maryland's school funding law,the proposed capital spending plan includes $74 million less than this year to build and renovate schools.

O'Malley also proposed paring back a signature film tax credit he expanded last year, though he would still spend $11 million to lure movie and television companies. He has also suggested tuition at most state colleges increase by 3 percent.

The governor put more cash behind two other tax credits designed to encourage investment in biotechnology and cyber security businesses.

Weak economic growth, complicated by the federal shutdown and budget cuts, left state analysts searching for a way to close a budget gap of more than $400 million. To help close part of it, O'Malley suggested slowing down the pace of contributing to the state's pension fund, as well as selling off 11 old medical evacuation helicopters to raise nearly $18 million.

Senate Minority Leader David Brinkley said the state planned to sell those helicopters anyway to pay off the debt incurred to buy the new fleet. Now, he said, O'Malley's plan calls for the state to find a new way to pay off that debt. "He's again pushing some of his costs off to his successors," Brinkley said.

O'Malley said his administration inherited a structural deficit caused when lawmakers approved an income tax cut and then a landmark plan to increase spending on schools. The mismatch between revenue, which dropped during the economic recession, and spending growth caused a structural deficit that once stood at $2 billion.

O'Malley fell short of his goal to erasing that, but said he takes satisfaction in having winnowed the expected future shortfall to one that's on course to be resolved by 2017.

"So much of the tough decisions that we made over these last few years have righted the ship, have gotten us on a better course," O'Malley said. "We've corrected a lot of the short-sighted math for the prior decade."